Starting a Restaurant Business

Starting a restaurant business requires scrupulous planning, intense micro-management and a heavy initial investment, but if successful, it can blossom into a rewarding and long-lasting business. Many restaurants have lasted for decades, and some for centuries. How can an ordinary investor successfully start a restaurant business?

Concept, Location and Financing

First and foremost, you need to do a comprehensive survey of your area. If your target location is saturated with pizza shop, then you shouldn't open a pizza shop. If the area is populated by college students, then you should focus on lower-priced fare. If the area's real estate is cheap, but the surroundings aren't safe, then you shouldn't set up shop there. Legendary entrepreneurs Ben Cohen and Jerry Greenfield started up their ice cream chain - Ben & Jerry's - after setting up in the only local college town without an ice cream shop. The lack of competition made them an instant monopoly.

Once you know the cuisine that you'll be serving, you should sketch out a concept that will set your restaurant apart from its competitors. Ben & Jerry's offered crazy flavors, Krispy Kreme attracted visitors with its donut conveyor belt, McDonald's produced larger burgers than its peers - such as White Castle, and Domino's Pizza introduced the concept of a 30-minute delivery. Your company should have a concept - which can be a gimmick - that makes it memorable. After you have a rough concept, write out a comprehensive business plan, which will help calculate your start-up costs. If you're starting from scratch, and not purchasing a franchise, the costs will primarily consist of real estate, equipment, labor and promotion costs. This initial cost can be staggering, and unless you are already wealthy, you need to explore different avenues of financing.

Your can pursue financing from venture capitalists, angel investors, family, friends or from the bank. Depending on the size of your restaurant, you may need to combine several of these to meet your startup costs. Be aware that shouldering this debt this is a massive risk, and your restaurant may take years to become profitable.

Setting up your Restaurant

Now that you have raised enough capital to open your restaurant, you'll need design teams - both exterior and interior - to help your concept sketches become a reality. Only hire reputable contractors, researched thoroughly on sites such as the Better Business Bureau, to avoid being ripped off. Make sure your space is efficiently used, functional as well as aesthetically pleasing. Finish off the design with lighting and music. Insure that your designers are well aware of your budget limitations, and that they make cost effective choices. Purchase kitchen equipment wisely - while cheaper models may save you money in the short run, costly breakdowns can cause your operations to grind to a halt. Schedule a regular maintenance schedule for your equipment before you even open your doors. You'll also need to order computers and cash registers, and the pertinent software.

Now that the building is ready, you'll need to set up relationships with vendors, and choose an established food service - such as Sysco - to provide you with the raw ingredients. Keep a careful inventory of available ingredients and expiration dates, as well as more expensive ingredients that can be subsituted with cheaper alternatives. With the help of an experienced chef, create a master recipe book, and write an easy to follow manual for other employees to follow. Then, calculate the cost of the ingredients plus labor for each dish, then pick a reasonable price that will generate profits. Once you've decided on the final menu and costs, design an attractive menu with the aid of an experienced graphic designer. If you plan to serve alcohol at your restaurant, apply for the proper permits.

Hiring Managers

Once you've got the ball rolling, you probably won't want to spend every waking moment at your restaurant. You should hire an experienced manager in the food service industry to help you oversee operations. They should be more familiar with overseeing kitchen operations, tracking inventory and keeping customers happy than you. Once the restaurant is left in their capable hands, you can breathe easy and let your new investment slowly accumulate capital.